Tarik, a single taxpayer, has AGI of $55,000 which includes $1,000 of qualified dividends. Tarik does not of itemize deductions. What is his 2018 federal income tax?
A) $5,400
B) $5,330
C) $5,550
D) None of the above.
B) $5,330
The calculation of the tax is split between the tax on the qualifying dividends and the balance of the taxable income. The tax on the dividend income of $1,000 is $150 ($1,000 × .15). The tax on the $42,000 balance of taxable income is .22($42,000 - 38,700) + $4,453.50 = $5,180 rounded. The total tax liability is $5,180 + 150 = $5,330.
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